UK Finance calls for closer links in private and public markets
UK Finance has called for closer public and private market links in order to support the growth of the British economy.
In a new paper co-authored by EY, titled ‘A Unified Strategy for Growth and Prosperity’, UK Finance said that closer ties between the public and private markets could lead to new innovations and solutions to support UK company growth and liquidity.
These may include the launch of privately funded growth funds, crossover funds and the proposed Private Intermittent Securities and Capital Exchange System (PISCES).
The report found that the UK’s capital markets are evolving, and while public markets remain a major funding source, private markets are catching up.
UK Finance noted that private capital markets now providing approximately £1.2tn in funding. Venture capital has grown by 20 per cent per year on a compounded basis, private equity by 11 per cent, and private credit by 43 per cent since 2013.
The sustained growth of venture capital and private equity has also contributed to the continued growth of UK capital pools, with these capital sources accounting for 15 per cent of newly issued capital in 2024, compared with five per cent in 2013, UK Finance added.
The report found that there is an opportunity for around 17,000 further companies to access the capital they need to continue their growth journey.
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In order to maintain the UK’s status as a leading financial centre, UK Finance set out a series of potential actions for government, regulators, and industry. These include forging closer links between public and private markets, regulatory reform, targeted tax incentives, greater support for businesses, and a strengthening of existing government-backed funding schemes and innovations.
“Our capital markets are vitally important to the economy – powering homeownership, driving business growth, and securing our financial futures,” said Conor Lawlor, managing director of global banking, markets and international affairs at UK Finance.
“We have a world-class ecosystem of public and private markets, and a real opportunity to strengthen the way they work together to support the most innovative companies and national projects.
“By harnessing the full potential of private markets alongside public markets, we can ensure businesses of all sizes have access to the capital they need to scale. This report makes clear; the tools to build stronger, more dynamic capital markets are already in our hands. Now is the time to use them.”
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“The UK has a strong history of innovation leading to economic growth, and has long been a top destination of choice to start and scale a business,” added Axe Ali, EMEIA financial services head of private equity and venture capital at EY.
“This new research shows that while parts of the UK’s public financing market – which many businesses rely on for capital – are decreasing in size, the private market is growing rapidly.
“Closer public and private market collaboration could help to address financing imbalances across key UK regions and sectors, and ensure the UK’s most innovative, growing businesses can access vital capital. This will have a material impact not only on individual companies looking to scale, but on our economy as a whole.”
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